Lessons learnt….so far

Jeff Rogut
Friday, 25 September 2015

The convenience industry has been in the spotlight and news for the past few weeks, unfortunately for the wrong reasons.
It goes without saying that neither the AACS nor its members condone any wrongdoing. We will be actively working with our members, be they larger corporates or the thousands of small business operators who comprise the industry, to provide whatever support or information they require.
AACS members are committed to high ethical standards in operating their businesses. The maintenance of these standards and ethics is important to all stakeholders, from members of the general public, customers, employees, suppliers and owners.
From the media reports into the issues allegedly uncovered, and these are yet to be borne out by an independent panel, a Senate Committee inquiry and regulators, there are nevertheless some crucial lessons we all can learn.
But these lessons should be considered against the background of this key point: we have every reason to be confident and optimistic about the future of the convenience industry in Australia.
While we must all continually seek to improve the way we do things, innovating for the future, we must also remember our industry in Australia is on a growth trajectory.
Our strong performance owes everything to the professional, innovative, customer-focused approach of our operators. It reinforces the commitment to best practice that the vast majority of convenience professionals – those of us who live and breathe this industry – share.
Our industry continues to offer positive employment opportunities to thousands of hard working people, who in turn serve millions of Australians every day. We have been a fixture in local communities for decades and we will be for decades to come.
As CEO of AACS and having worked in the industry for many years, I have gained an understanding of numerous perspectives which I’d like to share with you using the acronym SELECT:
Selection: if you are a franchisor, the selection of your franchisees is absolutely critical to your long term success. Franchisees represent your brand and importantly, they represent you. If they are successful, you will be, however if they fail, you will too, and potentially to a greater degree in terms of reputation and financial loss. Selection of your team that interacts with franchisees and stores is absolutely crucial. Are they tuned in to what’s really going on, and when things are going off track are they alerting you so that immediate corrective action may be taken? Suggestion: greater rigour in franchisee selection as well as operational support. It’s about more than simply being able to raise the initial investment to buy the store and pay the franchisee fee.
Engagement: having happy franchisees may be an admirable objective, but unless your business is totally engaged with them you will miss the signs that things may be off track. Sure, franchisees are independent business people, but they may have limited business skills and need greater support. Importantly, staff in stores should also be engaged so that you have a grassroots view of what’s happening in your business. Suggestion: Increased formal and informal meetings with franchisees and their staff – they all wear your brand on their uniforms and represent you. Develop feedback mechanisms so that everyone feels that they can provide feedback in a non-threatening manner – and it’s acted upon. ‘Where there’s smoke there’s usually fire’ – don’t wait for the inferno – addressing spot fires and their causes may prevent a disaster later on, whether the smoke is seen from your internal sources or highlighted by external sources. You need to constantly develop a culture which is open and transparent so that there are no feelings of fear or intimidation attached to coming forward by any party and raising issues to be addressed.
Legal: all parties have legal rights and responsibilities. Ensuring that your employees, franchisees and their staff are aware of their rights and responsibilities is an important responsibility of the franchisor, even though they may feel at arm’s length from the operation. Remember, the actions of your franchisees reflect on your brand, your values and you. Suggestion: Develop easy to understand legal responsibility guidelines for the various levels of your business, and ensure that they are understood and complied with. Conduct spot checks of staff to ensure that they are aware of their rights, and that franchisees fully understand their responsibilities before setting foot in a store of their own.
Economic: review the financial model to ensure that you have sufficient return to be able to invest in growing the business, and importantly that franchisees have sufficient income to cover all costs and make an adequate living from the store. Franchisors and franchisees have a truly symbiotic relationship – one cannot thrive without the other. Suggestion: Whether its store margins or fuel commissions, all should be regularly monitored, but fully reviewed independently at least every 3 to 5 years to ensure that the basis for the operation is still relevant and sound. What appeared to be profitable for a business 10 years ago may well and truly be out of date now.
Consequences: the consequences for doing the wrong thing, whether intentionally or unintentionally, can be dire – diminished brand value, reputational damage, financial losses and potentially business failure. Suggestion: Consequences need to be reinforced and understood at every level in the business, including the consequences of knowing about actions that may be taking place that are immoral or illegal and not doing anything about it.
Training: usually the catch all solution, but unless training is regularly followed up to ensure that what was taught is actually being implemented, there is little value in using this as a solution or excuse. Suggestion: Regular reviews of key business practices should be undertaken to ensure that support and store staff are aware of their rights and responsibilities. This includes operational issues in terms of OHS, store operation, customer care for example, as well as legal and regulatory requirements and responsibilities.
We should never lose sight of the importance of best practice as we build businesses of which convenience store owners, operators, employees and the community can be proud. Nor should we lose sight of the bright future that awaits.
Jeff Rogut FAIM MAICD
Chief Executive Officer
Australasian Association of Convenience Stores Limited
ACN: 156 638 023